Remember that your internet marketing or network marketing business is a BUSINESS. You must first have a good solid plan on how to get clients. This should be clearly listed and explained step by step, with tasks to complete each day that will lead you to your goals. Some action steps will be free, but some will cost money (and, truth be told, you should have a marketing budget, even if it’s small to begin with). But how do you know how well your plan is working?
Well, if you’ve ever requested investment funds from a bank or investor (sometimes called “angel investors”), they ask key questions to assess how your business is doing. Shouldn’t you do the same? Whether you’re a network marketer, internet marketer, or just own a self-funded small business, you need to know how to gather this information so you can see where your money is going, measure your progress, and then make informed decisions. as to what changes you want to make in the future. Not many network marketing training courses cover this information, but it’s important to have.
One question that will be asked is: what is the cost of customer acquisition?
Customer Acquisition Cost (CAC) or Customer Acquisition Cost
This is simply the amount of money you spend to acquire a customer. For network marketers (MLMs), this could also mean adding a distributor to your team.
In the case of our industry, almost all costs are considered CAC. For example:
• Online ads: cost per click (cpc)
• Buying leads: cost per lead
• Memberships to websites that help you generate or manage leads
• Product purchased for samples
• Business products: flyers, CDs, DVDs, etc. purchased to give to potential customers
Please note that this is only a short list!
How do you calculate your CAC? Simply list your expenses in a spreadsheet for a given month and divide by the number of clients. So if you spent $100 on leads and online ads in a given month and gained 10 customers, that would be a CAC of $10.
Keep in mind that as you get more experience and training in internet and network marketing, your CAC is bound to go down (which is a good thing). Today you can place an ad online that costs you $0.20 per click, but 6 months later your ads may be costing you $.05 per click simply because you gained education and experience that helped you lower the cost of your ads. For an offline effort, maybe you hosted a presentation and out of 100 guests got 10 clients. After some training with your upline, external training, or course, your next presentation generated 40 customers out of 100 invites. The cost of hosting the presentation was the same, but because you gained more customers, your CAC dropped tremendously.
Understanding and knowing your CAC will tell you if your efforts are improving over time, or if not, then don’t give up! Make small changes to the test results and definitely get more training. Network marketing is a profession like any other. Take the time and effort to learn as much as you can, from your parent company and from outside experts.